Please help me rack up debt

March 5, 2008 8:40 AM

OK, based on AskMeFi's advice on how to go about finding the right therapist, I should set up appointments with a few different financial advisers to determine a good fit. But how do I go about making the initial selection in the first place, and once there what questions to ask and how to assess their responses?

I have a troubled relationship with numbers, they confuse me and make me feel very insecure. I prefer not having to think about money. I earn a good living, have no debts or children, pay my bills on time and don't spend excessively. I do have a (same-sex) partner who is dependent on me due to a permanent and debilitating illness. Until now I simply put any extra cash in a high-yield savings account, but I've just been hit by a (relatively) huge tax bill due to my savings, and I realise I should have started managing my superannuation oh, about ten years ago. I'm in Australia and it seems to me that having a mortgage or taking out loans is far more rewarding tax-wise than saving up for a rainy day.

Despite my anxiety about money matters I know I need to gird up and get cluey but don't know where to start, or how to go about finding a financial adviser that's right for me. Please hope!

(Just in case, my throwaway email is [e-mail])

posted by anonymous to work & money (4 comments total)

I have a friend who is very financially savvy. He had been burned by financial advisers in the past*, and is now very happy with the man he picked. Here's what he did: he let the adviser go through his spiel, then he talked about himself a little, and said to the adviser: "Okay, what type of investor am I?"

The guy picked right up on just what my friend was like and was able to recommend investments and justify them based on his personality type. Pretty cool.

So I guess my advice would be to find someone you feel understands what your relationship with money is on a personal level. Friends and word of mouth seem like the best place to start.

*Advisors that work for national chains frequently recommend investments because their company wants them to, i.e., "Push this stock," rather than what is best for each individual consumer, IMHO.
posted by misha at 10:03 AM on March 5

I think it's always fair to ask professionals to talk a little bit about their philosophy in pursuing their job, and how that impacts the relationships they have with clients.

A good financial planner should be able to talk clearly and cogently about their philosophy in running their business, and how that influences how they interact with clients. If someone says, "I really see my role as teaching people how to manage their own money, and I emphasize people making their own decisions rather than just taking my recommendations, because it's about empowering my clients," that might definitely influence how well you fit with them given that you prefer to not think about money, right? You might have someone who says that they try to take a whole-person approach, and not just focus on liquid assets in the bank, but also on whether someone has adequate insurance, or what their income prospects are.

I'm not suggesting that the answers above are the "right" ones. I think that any advisor worth their salt will be able to describe how they approach their job, and what their strengths are. If someone responds with, "well, what are you looking for?" I think that's a bit of a danger sign--you don't want someone who just trying to sell you on themselves rather than being able to say, this is how I run my business and this is the sort of person that will probably work best with me.

I think that asking those sorts of questions about philosophy and how they prefer to interact with clients, and what their ideal client is like (pro-active? prefers to leave it to them?), will naturally lead you to decide one person is the best fit. You won't really know what the "right" answer is until you hear it, and compare it to others, though.
posted by iminurmefi at 10:49 AM on March 5

Ask how they are compensated for their work. Do you pay them directly (and how much, and when?), do they get paid by companies whose products they sell you, or is it a combination of the two? Think about how their means of compensation might influence their advice.
posted by yohko at 11:49 AM on March 5

Another resource that might be helpful to you is this list of questions to ask a potential financial adviser (from the Motley Fool, which is a pretty fantastic resource for stuff like this). If you feel like you don't know where to start, this seems like a good place. Some of it is America-centric, particularly those questions relating to certifications and qualifications, but the general gist should be useful.
posted by iminurmefi at 12:35 PM on March 6